Nikolas Sargeant
TL;DR
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The SEC approved a Cboe BZX rule change covering six proposed leveraged ETFs from Volatility Shares.
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The funds target three times the daily returns of bitcoin, ether, gold, silver, crude oil, and natural gas.
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Trading cannot begin until the SEC declares the issuer’s registration statement effective.
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Daily leverage resets mean returns over multiple days can differ substantially from three times the underlying asset’s performance.
Approval Opens the Door to Higher Crypto Leverage
The U.S. Securities and Exchange Commission has approved a Cboe BZX rule change allowing six proposed ETFs from Volatility Shares, including funds targeting three times the daily returns of bitcoin and ether.
The Oct. 2 decision represents a step beyond the 2x leverage previously available through U.S. crypto funds. The proposed lineup also includes leveraged exposure to gold, silver, crude oil and natural gas.
However, the approval does not mean the products are ready to trade. Volatility Shares still needs the SEC to declare its registration statement effective, and the order does not establish a launch deadline.
The bitcoin and ether products would hold regulated futures contracts rather than the cryptocurrencies themselves. Their objective concerns daily performance, a distinction that becomes especially important when positions remain open across multiple sessions.
To maintain approximately 3x exposure, the funds must rebalance each day. After gains, they generally need to increase futures exposure. After losses, they need to reduce it. These adjustments can create mechanical buying and selling flows, often concentrated near the market close.
If the funds attract substantial assets, those flows could contribute to price fluctuations in the markets where they operate. Their potential influence would depend partly on fund size and available liquidity.
For holders, the more immediate issue is compounding. A fund targeting three times an asset’s daily return does not promise three times its return over a week, month or year.
The sequence of gains and losses matters. Consequently, the leveraged fund’s longer-term result can diverge sharply from a simple multiple of the underlying asset’s performance.
Volatility Decay Can Produce Losses in Sideways Markets
Consider an asset that rises 10% on one day and falls 10% the next. Starting at $100, it increases to $110 before falling to $99, leaving a two-day loss of 1%.
A hypothetical 3x fund starting at $100 would gain 30% to reach $130, then lose 30% to finish at $91. Its loss would be 9%, before fees and other costs.
This illustrates volatility decay: repeated price swings can erode a leveraged product’s value even when the underlying asset ends close to its starting point.
Blockstream CEO Adam Back highlighted this problem, warning that automatic releveraging can drain capital during volatile, sideways trading. Volatility Shares also acknowledges in its preliminary prospectus that greater benchmark volatility increases the potential for this effect.
The proposed funds also face the mechanics of maintaining futures positions. As contracts approach expiration, funds must replace them with later-dated contracts. When those replacement contracts cost more, rolling the position can create a drag on returns.
That expense comes alongside the effects of daily leverage resets and can further separate fund performance from the cryptocurrency’s price movement.
Futures-based exposure therefore differs from directly owning bitcoin or ether, or holding a spot product. The distinction concerns both the assets held and the way performance accumulates.
Products Target Active Traders
Bloomberg ETF analyst Eric Balchunas described leveraged ETFs as trading tools rather than investments intended for long holding periods.
@adam3us Correct. Leveraged ETFs are for trading not investing.
— Eric Balchunas (@EricBalchunas) October 3, 2026
Volatility Shares’ preliminary filing similarly characterizes its proposed 3x Bitcoin ETF as speculative and warns that investors must be able to bear the risk of a total loss.
The approval expands the range of potential crypto trading products. Before those funds reach the market, however, the remaining registration step must be completed. Their eventual availability would give traders greater daily exposure while making leverage resets, holding periods, and futures costs central to understanding their results.
